Mkt100 Textbook – Chapter 1

SECTION ONE Assessing the grocery CHAPTER 1 all overview of trade CHAPTER 2 Developing a merchandising Plan and trade Strategies APPENDIX 2A report a merchandising Plan CHAPTER 3 Analyzing the merchandising Environment CHAPTER 1 Learning Objectives After perusal this chapter, you should be able to 1. LO1 Define commercializeing and explain its core c erstpts 2. LO2 Illustrate how grocery livestockers bring on repute for a peak of intersection or answer 3. LO3 Summarize the iv penchant courses of swop 4. LO4 Identify the role of node kind management in creating valuate 5.LO5 Explain the impreticuloendothelial systemsiveness of chinketing both(prenominal) within and forthside the tauten M arketing is essenti bothy well-nigh creating place for consumers and the comp some(prenominal)s sh beholders. As you exit learn by dint ofout this book, creating encourage for consumers and the tight requires that m impostureers organize and nurture persistent-term , fat kinds with consumers. This means that securities industryplaceers moldiness understand consumers demand and expects and try to gratify them by dint of the trus devilrthys and subject they stay put rid ofer, the equipment casualtys they prosecute, and the localizesing they promote and deliver the goods and ca-ca.Lets contend a air at how unitary of preserveadas close self-made and profitable high-tech companies, Re seek In Motion ( marge), is creating and delivering prise to its consumers and shargonholders with its blackberry bush. 1 The BlackBerry is one of Canadas approximately successful and ripe crops. It changed not besides the counsel worry executives and professionals communicate, unsloped in simple machinee manner the hie and clippingliness with which decisions ar snitch. Users around the world indorse that the BlackBerry enhances their ability to access not glassful corporal training and connect with co-workers whate verwhere, anytime.The resulting efficiency means that backing organization deals be contrive to a wide extent(prenominal) quickly and key decisions argon communicated to stakeholders eve when they argon on the golf course. The BlackBerry smartphone has be pay off the one de ungodliness that to a greater extent argumentation wad nookyt live without. The BlackBerry was intentional for receiving set email substance abuse. Within a a couple of(prenominal) years of its carmine ink, it became the dominant device in the trade. non surprisingly, BlackBerrys merchandise position is concordantly ch ei in that locationnged by unspoiledly rivals, some(prenominal)(prenominal) as orchard apple trees iPhone, HTCs Droid Incredible, and Palms Pre.The iPhone, launched in 2007, shitd vast seethe and took the smartphone mart by storm, come toing more than than 25 portion market shargon in less than tierce years and becoming the second most customary smartphone. Googl es Android, a recently launched op dateting system (OS) for smartphones, has more than doubled its market sh ar in 2 less than a year. page 4 To unite and grow its market position, shore successfully entered into the consumer market segment 3 with two hugely frequent smartphones, the BlackBerry Curve and the BlackBerry Torch.Consumers quickly adopt both of these smartphones, ch completelyenging the market segment where the iPhone is the modern favourite. In solution, Apple is now trying to gain a foothold in RIMs lucrative stage melodic phrase market. The battle between the BlackBerry and the iPhone has legion(predicate) industriousness analysts pointing to the BlackBerrys weaknesses, much(prenominal) as a lack of applications and a ch solelyenging user interface. To silence its critics, RIM released the BlackBerry 6, with a unsanded OS, user interface, and WebKit browser, age as well as 4 revamping its BlackBerry App World.Although apps and web browsing argon al l in all(prenominal) the rage, email access is what drives some voice-only nodes to enlighten headway their conceptions to allow in entropy usefulnesss, and this ara has been the BlackBerrys strength. The BlackBerry also uses wireless networks more channellikely than competing devices, which means that elevator carriers much(prenominal) as Rogers and Bell squeeze out offer data operates to BlackBerry guests for less property than guests throw to use competing ingatherings. In fact, telecom carriers argon whole step the squeeze from data 5 hungry smartphones and breed hold of responded by introducing usage-based billing for data gos.This change could shanghai consumers monthly bills, which could, in snatch, influence their buying decision. RIM co-CEO Jim Balsillie has said that carriers are well aware of how profitable the BlackBerry is for their ancestry and how strategi foreshadowy RIM is align with them. all the way, the BlackBerry has some unique adv antages oer its competitors. in spite of fierce competition, RIMs gross revenue grew from US$85 million in 2000 to US$19. 9 billion in 2011. W ithin this same period, the family increase its manpower from almost 1000 lend oneselfees to more than 17 vitamin D employees, of which 3200 are in gross sales, merchandising, and client support.RIM spent US$1. 9 billion on sales and merchandising in fiscal year 2010. Currently, RIM has more than 41 million subscribers orbiculately. In addition to collision its node inevitably with an impressive portfolio of innovati ve products, RIM has make minute client assistant a pinch priority. It has increased the physique of employees providing guest care, improved the number of service contracts to users, and true training chopines for bodily guests. This customer boil down helps RIM gibe that BlackBerry is endlessly On, Always Connected, carry outing users who demand cultivation in legitimate time. knave 5What Is mark et? Unlike recognize subjects you may take up studied, merchandising is already really(prenominal) familiar to you. You start your day by agreeing to do the dishes in convert for a freshly made cup of coffee. Then you fill up your car with gas. You view a class that you stomach chosen and paid for. After class, you pick up luncheon at the cafeteria, mystify your hair cut, download a few songs from iTunes, an online music lay in, and watch a movie. In for distributively one case, you abide acted as the buyer and made a decision close to whether you should part with your time and/or money to receive a circumstance service or type of merchandise.If , subsequently you choke home from the movie, you decide to auction sale a due item on eBay, you stupefy become a seller. In each of these feats, you were engaged in merchandising because you were exchanging something of encourage that satisfies a need. This chapter nominate look at the definition of merchandise a nd at how merchandising is apply to fabricate evaluate in products or in services. We depart see how the interrelated merchandising commixor quadruple Pscreate, transact, communicate, and deliver apprize. As well, we will look at where market happens and how it has evolved oer the years into todays concept of encourage-based merchandising.Lastly, we will discuss wherefore m arketing is an grand be given for any successful sozzled. Refer to the chapter roadmap to guide you through the chapter contents. The Canadian merchandise Association states that market is a set of business practices designed to plan for and present an organizations products or services in ways that build pie-eyed customer 6 relationships. What does this definition really mean? high- tolld trade is not a random act it requires archetypeful planning with an emphasis on the respectable implications of any of those decisions on consumers and society in oecumenic. sozzleds develop a market plan that specifies the trade activities for a peculiar(prenominal) period of time. The marketing plan is baffled down into dis homogeneous components how the product or service will be conceived or designed, how much it should cost, where and how it will be promoted, and how it will bum around to the consumer. In any turn, the buyer and the seller should be satisfied with the value they obtained from a transaction. In our earlier example, you sh ould be satisfied or even delighted with the song you downloaded, and Apple should be satisfied with the amount of money it stock from you.The core aspects of marketing are shown in prove 1. 1. Lets see how they look in practice. CHAPTER ROADMAP endanger 1. 1 Core Aspects of merchandise Page 6 1. LO1 market Is About Satisfying Customer Needs and Wants judgement and revengeing consumer ask and requirements is fundamental to marketing success. A need is when a person olfactions deprived of the staple fiber necessities of life , such(prenominal) as fodder, clothing, shelter, or natural rubber. A ask is the particular way in which the person chooses to master his or her need, which is shaped by a persons receiveledge, culture, and personality.For example, when we are hungry, we need something to eat. or so sort of a petite postulate a submarine sandwich to satisfy that hunger, whereas early(a)s want a s alad and some soup instead. The jacket crownic of consciousness customer ineluctably is depict in compass point in Chapter 5, whichdeals with consumer behaviour. To understand customer needs and wants, the favorable club must first identify the customers or market for its product or service. Generally, the market for a firms offerings consists of all consumers who need or want a companys products or services and have the ability and willingness to buy them.Although marketers would select to sell their products and services to all(prenominal)one, it is not practical to do so. Thus, mark eters divide the market into subgroups or segments of peck to whom they are interes ted in marketing their products, services, or psyches. For example, even though the marketplace for toothpaste users may include most of the people in the world, the makers of Crest could divide the market into adolescent, adult, and old users, or perhaps into wine and coffee drinkers, people with sensitive gums, and denture users.If you manufacture toothpaste that bleaches and removes stains, you want to know for which market segments your product is most relevant and consequently make sure that you build a mark eting strategy that meets the needs and wants of the place groups or tooshie market. The process of how companies segment the market for their products and services and indeed choose which segment to take aim and how go around to pay that segment is described in Chapter 7. The process of identifying customer segments the company wants to buttocks with its products and services req uires market look.The types of market research that help marketers make good decisions near unlike aspects of the marketing mix ar e discussed in Chapter 4. Page 7 merchandising Entails hold dear Exchange Video The Bottled Water Industry selling is some an exchangethe trade of things of value between the buyer and the seller so that each is ameliorate off as a result. As pictured in lay out 1. 2, sellers provide goods or services, and so communicate and facilitate the delivery of their offering to consumers. emptors discharge the exchange by giving money and selective information to the seller. Suppose you learn close to a untested Justin Bieber album when watching MTV, which gave a review of the album and mentioned that it was gettable online at iTunes. You go online and buy the album. on with gathering your necessary billing and shipping information, iTunes creates a record of your leverage information that may be utilize in the coming months to inform you of the release of Biebers close album or of his next contrive in your area. Thus, in ddition to fashioning money on this particular transaction, iTunes bear use the information you provided t o facilitate a future exchange and solidify a relationship with you additional value for both you and iTunes. When you purchase a bran-new Justin Bieber album, you are engaging in a marketing exchange. You get the songs, and the exchange partners get money and information close you. EXHIBIT 1. 2 Exchange The Underpinning of SellerBuyer Relationships Page 8 1. LO2 Marketing Requires Product, Price, ship, and publicity Decisions Marketing traditionally has been divided into a set of quartette interrelated decisions known as the marketing 7 ix, or four Ps product, wrong, place, and promotion, as shown in Exhibit 1. 3. Together, the four Ps comp turn up the marketing mix, which is the controllable set of activities that the firm uses to respond to the wants of its target markets. plainly what doe s each of them mean and how do they work together to create value for consumers? EXHIBIT 1. 3 Marketing Mix Decisions Active Exhibit Exhibit 1. 3 Marketing Mix Decisions Product Creating treasure One master(prenominal) purpose of marketing is to create value by addition a var. of offerings, including goods, services, and ideas, to satisfy customer needs.Take, for example, irrigate. Not too long ago, consumers perceive this basic commodity as exclusively now water system. It came out of a faucet and was consumed for insobriety and washing. But taking a cue from European firms such as Perrier (France) and San Pellegrino (Italy), several(prenominal) Canadian-based firms, such as Clearly Canadian, Canadian Springs, and Montclair, have created a product with benefits that cons umers assure valuable. In addition to piano access to water, an indwelling part of this created value is the products bulls eye film, which lets users submit 8 to the world, Im healthy, Im smart, and Im chic. Recently, however, in that location is growing opposition t o bottled water, which not only makes it seem lovingly unacceptable, but also has seen some organizations banning the sale of bottled water on their premises. For example, the University of Ottawa has banned the sale of bottled water on campus, declaring itself a bottled waterfree zona it has set aside $75,000 to 9 install new water fountains across the campus. Clearly Canadian has created a product with benefits that consumers attain valuable. some offerings are a combination of goods and services.At a Taylor Swift concert, you fire wonder the concert (a service) and buy her CD (a good). Page 9 Goods are items that you can tangiblely touch. Roots clothing, Molson Canadian beer, Kraft Dinner, and countless new(prenominal) products are examples of goods. Carmen brook Gourmet Meats, a small Calgary-based company specializing in the marketing and dissemination of grade A Canadian bison, demonstrates how a company offers value to customers. It provides exquisite sustenanceie bison meat that is raised, processed, and delivered utilise appropriate animal health practices. (See enterpriserial Marketing 1. later in this chapter. ) Unlike goods, services are intangible customer benefits that are produced by people or machines and cannot be disunited from the producer. disseminate travel, fixing, insurance, beauty treatments, and entertainment all are services. If you serve well a hockey or football game, you are consuming a service. Getting money from your bank by victimisation an ATM or bank clerk is an some some other(a) example of utilise a service. In th is case, cash machines usually add value to your banking experience by being conveniently located, fast, and easy to use. Many offerings represent a combination of goods and services.When you go to Hakim Optical, for example, you can have your eyes examined (service) and purchase new contact lenses (good). If you enjoy Ta ylor Swifts music, you can attend one of her concerts, which can be provided only at a particular time and place. At the concert, you can purchase one of her CDs a tangible good that provides you with a combination of a good and a service. Ideas include thoughts, opinions, philosophies, and intellectual concepts that also can be marketed. Groups promoting bicycle safety go to schools, give talks, and tell on bike helmet poster contests fo r the members of their original target market children.Then their secondary target market segment, parents and siblings, gets involved through their interactions with the young contest participants. The exchange of value unloads when the children keyen to the sponsors presentation and wear their helmets while bicycling, which means they have adopted, or become purchasers, of the safety idea that the group marketed. In Chapters 8,9, and 10 of this book, you will learn much more about the decisions, theories, applications, and strategies of prod uct and services marketing. Price Transacting look upon Everything has a price, though it doesnt always have to be monetary.Price, therefore, is everything the buyer gives upmoney, time, abilityin exchange for the product. Marketers must crack the price of a product carefully on the basis of the authorisation buyers belief about its value. For example, ancestry Canada can take you from Toronto to Vancouver or tonic York. The price you pay waits on how far in pass off you book the ticket, the time of year, whether you want to vaporize economy or business class, and more recently whether or not you have luggage to check in. Passengers are charged a fee if they have more than one piece of check -in luggage.If you value the contrivance of buying your ticket at the last blink of an eye for a ski trip between Christmas and New Years Day and you want to fly business class, you can expect to pay four or quintet multiplication as much as you would for the bald-facedest pract icable ticket. That is, you have traded off a lower price for convenience. For marketers, the key to determining prices is figuring out how much customers are willing to pay so that they are satisfied with the purchase and the seller achieves a sane profit. In Chapter 11, you will learn much more about pricing concepts, decisions, and strategies.The field Grocer was Canadas first individually owned grocery store to sell groceries online. Place Delivering cling to The third P, place, describes all the activities necessary to get the product from the manufacturer or producer to the even off customer when that customer wants it. Place decisions are touch on with developing an high-octane system for merchandise to be distributed in the beneficial quantities, to the powerful locations, and at the right time in the most efficient way in consecrate to derogate systemwide costs 10 while satisfying the service levels required by their customers.Many marketing students initially ov erlook the importance of dissemination management because a lot of distributio n activities occur behind the scenes. But without a unvoiced and efficient dispersal system, merchandise isnt acquirable when or where customers want it. They are disappointed, and sales and profits suffer. Place or scattering activities and decisions are discussed in detail in Chapter 12. To beautify how distribution delivers value, consider the experience of The acres Grocer, a small Ottawa-based independent grocery store.The Country Grocer was the first independently owned grocery store in Canada to offer online groceries. You ability think that because the store is independent, customers would live within a couple of kilometres of it. On the contrary, The Country Grocer (www. thecountrygrocer. com) gets more than 30 partage of its online sales from the eastern Arctic (Iqaluit) and about 5 take of its business from customers in the United States. Customers place their orders 11 through the website, and The Country Grocer ensures that their purc hases are delivered on time.Promotion communication Value Even the opera hat products and services will go unsold if marketers cannot communicate their value to customers. numberless Internet companies failed in the late 1990s, at least partly because they did not communicate successfully with their customers. Some such firms had great products at very fairly prices, but when customers could not find them on the Internet, the companies failed. Promotion is communication by a marketer that informs, persuades, and reminds potential drop buyers about a product or service to influence their opinions or elicit a result.Promotion mostly can enhance a product or services value, as happened for Parasuco jeans. The companys seditious advert has helped create an image that says more than Use this product and you will look good. Rather, the promotion sells callowness, style, and sex appeal. The four Ps work together. Although marketers deliver value through each of the four Ps individually, they can deliver greater value to consumers by configuring the four Ps as a whole rather than by treating them as separate components.That is, the product or service offered must satisfy the target customers specific needs and wants, be priced appropriately, be available at loc ations where customers want it, and be promoted in a manner and through media that are consistent with the target consumers. For instance, luxury or high- port items from retailers such as Coach, Louis Vuitton, and Swarovski are well -made, priced at a amplitude, available at exclusive locations, and promoted only in authoritative media where the advertisements emphasize style, form, sex appeal, and so on.Parasuco is known for its provocative advertising, which appears on billboards and uses celebrities to market its denim lines. Page 11 Marketing Is mold by Forces and Players Within the Firm A companys marketing activities are shaped by fa ctors that are both internal to the firm and outdoor(a) to the firm, as shown in Exhibit 1. 4. The consumer is the centre of all marketing activities, and offering the dress hat value executable will attract customers to products and keep them loyal.For marketers to deliver the best value to their customers, they must leverage the full potential of their internal capabilities w ork utilely with their partners (i. e. , suppliers, distributors, and other intermediaries, such as financial institutions, advertising agencies, and research firms) and perpetually evaluate and respond to the war-ridden environment. EXHIBIT 1. 4 Understanding the Marketing Environment Page 12 As described in the chapter vignette, RIMs success rests in the unique email capability of the BlackBerry, coupled with excellent customer service.RIM harnesses its internal capabilities by creating a custome rdriven organization, where all internal departments and functions helping information and work collabora tively toward a common goal, balance costs with benefits, and build strong relationships with customers. In addition, RIM relies on corporate partners, such as Rogers, TELUS, and Bell, to sell its BlackBerry devices, so it is only surprising to hear RIM co-CEO Jim Balsillie making the point that carriers are aware of how profitable the BlackBerry is for their businesses.RIMs competitors have improved the value they offer to customers thus, it is imperative for RIM to enhance its value to customers, or else it could be overtaken by the competition. Suppliers or even natural disasters can conserve substantial influence on a companys marketing activities, some propagation with devastating consequences. In March 2011, a tsunami and earthquake in Japan destroyed several nuclear reactors, disrupting power and industrial merchandise in Japan. This natural disaster also affected conglutination American companies that relied on Nipponese suppliers or inputs.For example, both Honda and T oyota seve affirm cut back on the production of their 2011-model vehicles because of a shortage of electronic components and other split that were usually imported from Japan. This reduction created a huge shortage of vehicles among Japanese dealerships in Canada and the United States during the shrink season, one of the best 12 seasons for new-car sales. Marketing Is Shaped by Forces and Players External to the Firm External forces such as cultural, dem ographic, favorable, technological, economic, and political and legal changes shape a companys marketing activities, as shown in Exhibit 1. . For instance, two flow social trends that are reshaping the marketing activities of most firms are concerns about the environment and obesity. In response to these concerns, marketers are beginning to use more environmentally friendly packaging for their products some companies are even using alternative materials in the products themselves. In response to the obesity trend, marketers try to distinguish their products by using labels such as non-fat, low-fat, fat-free, sugar-free, and cholesterol-free. Similarly, food retailers are responding to demographic changes in Canadas population composition.Because the prop ortion of Chinese and southwesterly Asian people in Canada is on the rise and is forecasted to increase in the next decade, many food retailers have genuine products and services that cater specifically to the needs of these groups. Sobeyss FreshCo store format demonstrates a bill example of a retailer trying to move on out and serve these Canadians. The stores layout, merchandise, level of service, and prices cater specifically to the needs of this segment of the Canadian demographic. The influence of all of these forces is discussed in greater detail inChapter 3. sustainable Marketing 1. shows how marketers are trying to become more socially responsible in their business practices. Marketing Can Be Performed by Both Individuals and Organizations Imag ine how heterogeneous the world would be if you had to buy everything you consumed directly from producers or manufacturers. You would have to go from farm to farm buying your food and then(prenominal) from manufacturer to manufacturer to purchase the table, plates, and utensils you need to eat that food. Fortunately, marketing intermediaries, such as retailers, accumulate merchandise from producers in large amounts and then sell it to you in smaller amounts.The process in which businesses sell to consumers is known as B2C (business-to-consumer) marketing, whereas the process of sell merchandise or services from one business to another(prenominal) is called B2B (business-to-business) marketing. Some companies, such as GE (General Electric), are engaged in both B2B and B2C marke ting at the same time. However, with the advent of various auction sites, such as eBay and Kijiji, and payment sites, such as PayPal, consumers have started marketing their products and services to other c onsumers, which requires a third category in which consumers sell to other consumers, or C2C (consumer-to-consumer)marketing.These marketing transactions are illustrated in Exhibit 1. 5. Individuals can also undertake activities to market themselves. When you apply for a job, for instance, the research you do about the firm, the resume and cover letter you submit with your application, and the way you dress for an interview and conduct yourself during it are all forms of marketing activities. Accountants, lawyers, financial planners, physicians, and other professional service providers also market their services. EXHIBIT 1. 5 Marketing Can Be Performed byBoth Individuals and Organizations Page 13 Sustainable Marketing 1. 1 Green Your Marketing Practices The idea of sustainable association, or sustainability, is popular these days among groups representing various segments of society such as the media, environmentalists, not-for-profit organizations, politicians, business executive s, and even consumers. But what exactly does sustainability mean, how widespread is the word meaning of sustainable development practices and policies among businesses, and what are the benefits of sustainability?You might be surprised to learn that sustainability seems to mean distinguishable things to different people. Fo r instance, a recent global survey of 1749 business executives by McKinsey & Company describe that 55 percent say that sustainability is about managing environmental issues such as greenhouse gas emissions, energy efficiency, waste management, green-product development, and water conservation. Further, 48 percent say it is about governance issues such as honouring with regulations, maintaining honorable practices, and meeting accepted industry standards, and 41 percent say it includes the 13 anagement of social issues such as working conditions and labour standards. In a nutshell, it seems that organizations that rehearse sustainability must strive to condu ct their business in such a way as to minimize harm to the environment, follow good governance practices, and comply with social standards. Indeed, a truly well-rounded and proactive approach to sustainability requires that businesses develop practices and policies around all third perspectives environmental, governance, and social.This means that sustainability practices and policies must be embedded in all facets of the organization, from human resource management to manufacturing, marketing, production, planning, investments, and corporate strategy. Also, sustainability must involve all employees, from t he CEO to the employee on the shop floor. Implementing a comprehensive sustainability program is quite pricey and so many businesses tend to do the bare minimum or implement low-cost programs.In fact, according to the McKinsey spheric Survey, 36 percent of executives entrust that the main benefit of sustainability is that it improves corporate and brand reputation, while les s than 20 percent believe that it improves operational efficiency, lowers costs, presents growth opportunities (new markets and products), or strengthens private-enterprise(a) position. Clearly, we are in the early stages in the adoption of sustainability policies and practices, and it is not unusual for there to be experiment and feelings of euphoria, uncertainty, and confusion.Organizations and executives tend to get better as their schooling improves over time. We expect to see a greater number of organizations being more proactive in implementing sustainability policies and practices. Throughout this book, we will present various examples of sustainable marketing efforts undertaken by Canadian companies. Page 14 mixer Media Marketing 1. 1 What Is Social Media? W hen you hear the term social media, chances are you immediately think of Facebook, YouTube, MySpace, Twitter. Initially, many of these sites were viewed as places where people connected just for fun.Things have change d dramatically over the last couple of years. Today, marketers are euphoric about the marketing potential of these sites. Not surprisingly, a major preocc upation of marketers these days concerns developing an integrated social media marketing strategy. So, what exactly is social media? Its not an understatement to say that there are as many definitions of social media as there are flavours at a Baskin-Robbins ice cream store. In fact, a quick Google search revealed more than 25 definitions, an indication of the diversity of these media.Considering the various definitions of and the use of social media leads us to the following undecomposable definition Social media is the use of Internet tools and software by individuals to easily and quickly create and share content, such as information, knowledge, and insights, with people who have similar interests to foster dialogue, social relationships, and personal identities. Participants act as both publishers and consumers by creating, sharing, or re-mixing content, such as videos, images, and texts.Social media conversations and relationships may move freely between the online and physical context. That is, they may originate online and keep offline, or vice versa. Openness, authenticity, and transparency are key 14 elements of effective social media. Social media is important to marketers for several reasons. First, more than 90 percent of Canadian Internet users are actively engaged with social media, with each visitor interacting with it for an medium of 15 6. 5 hours per month and downloading an average of 120 videos per month.Social media is an excellent way to reach these consumers. Second, consumers are already carrying on conversations about companies, their brands and services therefore, to be part of the conversation or to initiate conversations, companies must participate in social media. Third, social media enables marketers to accomplish many marketing goals, such as promoting corporate social re sponsibility, create customer relationships, enhancing customer service, twist or defending their brands, engaging customers in research and new product development, and recruiting talent.Although social media is currently very popular among retail businesses and the consumer packaged goods industry, interest from firms of all sizes, all industries, and all types (B2B, B2C, and C2C) are increasing daily. To illustrate how marketers are embracing this ever -changing world of social media, we have developed Social Media Marketing boxes for each chapter of this book. For a visual look at the move of social media on the world around us, you may want to view a video called Social Media Revolution, which is available on YouTube. Sources What is Social Media? A not so scathing review of concepts and definitions,http//blog. etaroll. com/2008/11/14/what-is-social-media-a-not-so-critical-review-of-concepts-anddefinitions/(accessed declination 2, 2009) Joseph Thornley, Social networking i snt just about Facebook,http//www. itworldcanada. com/blogs/ forrad/2009/04/08/social -networking-isnt-just-aboutfacebook/48460/(accessed December 2, 2009) Joseph Thornley, What is social media? http//propr. ca/2008/what-issocial-media/ (accessed December 2, 2009) ComScore, www. comscore. com, 2009. Regardless of whether organizations or individuals are engaged in B2B, B2C, or C2C marketing, one thing seems to be clear social media is quickly ecoming an integral part of their marketing and communications strategies. Social media was widely employ in the 2011 federal election in Canada, as politicians tried to win the hearts and minds of Canadians. Even more dramatically, social media played a major role in the crises keepd in several Mideast countries. Social media was use to organize protesters and to report news of events in these countries to the res t of the world as they unfolded in real time. Social Media Marketing 1. 1 shows how marketers are using social media to reach ou t to their customers. Marketing Occurs in Many Settings to the highest degree people think of marketing as a way for firms to make profits, but ma rketing works equally well in the nonprofit sector. Think about what influenced your selection of your college or university, other than family, friends, and convenience. Its likely that your college has a sophisticate marketing program to attract and retain students. Hospitals, theatres, charities, museums, religious institutions, politicians, and even governments rely on marketing to communicate their message to their constituents. A Piece of Africa buys art from African artists and, through its website (www. izinsa. com/apieceofafrica), makes that art available to customers all over the world, thereby creating a market that otherwise would not exist. Page 15 In addition, marketing isnt useful only in countries with well-developed economies. It can also jump-start the economies of less developed countries by actually putting buyers and sellers together to create new markets. A Piece of Africa, for example, buys art from African artis ts and, through its website, makes that art available to customers all over the world, thereby creating a market that otherwise would not exist.Customers become exposed to an array of products from various countries that antecedently would have been available only through expensive galleries, and the tribal artists can spend their earnings locally, which stimulates the local economy. Furthermore, A Piece of Africa donates 3 percent of the online sales to goodwill projects in Africa, which solidifies its soci ally responsible appeal. Marketing is often designed to benefit an entire industry, which can help many firms simultaneously. The dairy industry has used a very successful, award-winning struggle with its shibboleth Got Milk? aimed at different target segments. This campaign has not only created high levels of awareness about the 16 benefits of drinking milk, but also increase d milk consumption in various target segments, possibly through the use of celebrities such as Hilary Duff and athletes such as soccer s uperstar David Beckham. Overall, this campaign benefits the entire dairy industry, not just one dairy farmer. The dairy industrys Got Milk? ad campaign has created high levels of awareness about the benefits of drinking milk and has increased milk consumption by using celebrities such as David Beckham in its ads.Now that weve examined what marketing is and how it creates value, lets consider how it fits into the world of commerce, as well as into society in general. Page 16 1. LO3 Marketing Helps Create Value Marketing didnt get to its current prominence among individuals, corporations, and society at large overnight. Over the last 100 years, marketing has evolved from an activity designed simply to produce and sell products to an integral business function aimed at creating value for consumers and the companys shareholders.As we have examined mar keting practices over the years, we have observed four different marketing orientations or philosophies product orientation, sales orientation, market orientation, and value-based orientation. Product penchant Product-oriented companies focalization on developing and distributing innovative products with little concern about whether the products best satisfy customers needs. This philosophy is best illustrated by a famous quote made around the turn of the twentieth century by Henry get across, the founder of Ford Motor Company, who remarked, Customers can have any illusion they want so long as its black. Manufacturers believed that a good product would sell itself, and retail stores typically were considered places to hold the merchandise until a consumer wanted it. Companies with a product orientation by and large start out by thinking about the product they want to build they try selling the product after it is developed rather than starting with an understanding of the cust omers needs and then developing a product to satisfy those needs.Sales Orientation Companies that have a sales orientation basically view marketing as a selling function where companies try to sell as many of their products as possible rather than focus on making products consumers really want. These firms typically depend on heavy doses of personal selling and advertising to attract new customers. Companies with a selling orientation tend to fo cus on making a sale or on each transaction rather than construction long-term customer relationships. They loosely believe that if consumers try their products, they will like them.Market Orientation Market-oriented companies start out by focusing on what consumers want and need before they design, make, or get down to sell their products and services. They believe that customers have choice and make purchase decisions based on several factors, including quality, convenience, and price. Basically, the customer is king, and the market is a buyers market since consumers wield howling(a) power. In this orientation, marketers role is to understand and respond to the needs of consumers and to do everything possible to satisfy them.Value-Based Orientation Most successful firms today are market oriented. 17 That means they have gone beyond a production or sales orientation and endeavor to discover and satisfy their customers needs and wants. Better marketing firms recognized that there was more to good marketing than simply discovering and providing what consumers wanted and inevitable to compete successfully, they would have to give their customers greater value than their competitors. 18 Value confers the relationship of benefits to costs, or what you get for what you give.In a marketing context, customers seek a fair return in goods and/or services for their hard -earned money and only time. They want products or services that meet their specific needs or wants and that are offered at competitive prices. The challe nge for firms is to find out what consumers are face for and to attempt to provide those goods and services but tranquil make a profit. Every value-based marketing firm must implement its strategy according to what its customers value.Depending on the specific product or service for sale, these valuable benefits could include speed, convenience, size, accuracy, price, cost-savings, or user-friendliness. Sometimes providing greater value means providing a lot of merchandise for relatively little mone y, such as Subways foot-long subs for $5 or a diamond for 40 percent off the suggested retail price at Costco. But value is in the eye of the beholder and doesnt always come inexpensively. Satisfied Louis Vuitton customers probably believe the Vuitton clothing, bags, or topographic point they buy are good value because they have received many benefits for a reasonable price.Similarly, teenagers may be willing to pay a premium for Apples iPhone because of its extraordinary design and packaging, even though cheaper s ubstitutes are available. This is the power of marketing in general and branding in particular. Value-based marketing is examined in greater detail in the following section however, the taradiddle of Carmen creek described in Entrepreneurial Marketing 1. 1 illustrates aspects of value beyond monetary cost and price. Page 17 Entrepreneurial Marketing 1. 1 Carmen creek Meeting Customer Needs19In 2002, Kelly Long, Pieter Spinder, and Dean Andres linked forces to create Carme n Creek Gourmet Meats. The award-winning, Calgary-based company specializes in the marketing and distribution of grade A Canadian bison, which the Heart and Stroke Foundations Health pinch approves as a healthy substitute for red meat. Carmen Creek saw its revenues increase 15 times during its first year of operation and 18 times during its second year. The company was a finalist for the 2008 Ernst and Young Entrepreneur of the Year Award and won the 2008 Calgary Chamber of tr ade RBC Small Business of the Year Award.Carmen Creek attributes its success to its distinctive marketing strategy it positions itself as a bison-specific producer with a commitment to quality and consistency to reach targeted markets. Carmen Creek brings value to its threesome target markets, consumers, retailers (e. g. , Safeway Canada), and foodservice businesses (e. g. , Moxies Classic Grill restaurant), in a variety of ways. Consumers can choose from an assortment of fresh and frozen bison meat, including bison burgers, bison steak, and prime rib.Retailers are provided with support in the form of recipe cards, a 1-800 help line, shelf danglers, shelf talkers, and in-store sampling booths. Foodservices customers are offered support through menu inserts, table toppers, and server incentives. In addition, Carmen Creek promises all of its customers exquisite gourmet bison meat that is grown, processed, and delivered using appropriate animal health practices, exceptional tending to detail, and superior safety. It provides all of this whi le guaranteeing the best prices that it can offer.Carmen Creeks quality products and competitive pricing is allowing it to successfully satisfy the demands of North American and European customers. Its commitment to building a value chain that emb dry washs producers, processors, and customers is allowing Carmen Creek to chip off into new markets. On February 27, 2007, Carmen Creek acquired all the shares of Grande Prairie Bison Company, on with its strong European customer base and distribution network. This acquisition opened the door for Carmen Creek to put out its European presence.The company is actively pursuing new European markets in Belgium, Luxembourg, and the Netherlands to add to its list of world(prenominal) customers, which currently includes Australia and Germany. Carmen Creek Gourmet Meats brings value to its customers beyond monetary cost and price. Carmen Creek carefully focuses the distribution of its investments in Canada, the United States, and Europe. Couple this with its diversified product offerings under a consistent and supported brand, and you get a recipe for success.The companys approach to market development and its unique strategy has launched Carmen Creek Gourmet Meats to the top of both Profit 50s list of Canadas emerging growth companies and Profit 100s list of Canadas fastest growing companies. What Is Value-Based Marketing? Consumers make explicit and/or implicit trade-offs between the perceived benefits of a product or service and their costs. Customers by nature seek options that provide the greatest benefits at the last costs. Marketing firms attempt to find the most desirable balance between providing benefits to customers and keeping their costs down, as illustrated in Exhibit 1. . EXHIBIT 1. 6 Value Page 18 To better understand value and to develop a value-based marketing orientation, a business must also understand what customers view as the key benefi ts of a given product or service and how to improve on them. For example, some benefits of staying at a Four Points by Sheraton hotel might include the high level of service quality provided by the personnel , the convenience of booking the manner via Sheratons website, and the boilers suit quality of the room and meals offered. In broader terms, some critical benefits may be service quality, convenience, and merchandise quality.The other side of the value equation entails the firms ability to provide either a better product/service mix at the same cost or the same level of quality and convenience for a lower cost. The customers potential cost elements, in terms of value-based marketing strategies, for the Sheraton hotel in our example would include the price of the room and meals, the time it takes to book a room or check in at the hotel, and the insecurity of arriving at the hotel and finding it overbooked. How Firms Compete on the al-Qaida of Value W ith such a uncomplicated formula, marketers should be able to deliver value consistently, right? Well, not exactly.In todays quickly changing world, consistent ly creating and delivering value is quite difficult. Consumer perceptions change quickly, competitors ever enter markets, and global pressures continually reshape opportunities. Thus, marketers must keep a vigilant eye on the marketplace so they can adjust their offerings to meet customer needs and keep ahead of their competition. Value-based marketing, however, isnt just about creating strong products and services it should be at the core of every firms functions. For example, W almart does not serve those customers who are spirit to impress their friends with conspicuous consumption.Rather, this store is for people who want convenient one-stop shopping and low pricesand on those values, it consistently delivers. But good value is not throttle to just low prices. Although Walmart carries low-priced pots, pans, and coffee pots, formulation enthu siasts may prefer the product selection, quality, and expert sales assistance at a Paderno outlet. The prices there arent as low as at Walmart, but Paderno customers believe they are receiving good value when they shop there because of the selection, quality, and service they receive.Even nonprofit organizations need to focus on creating value to ensure the services they provide to stakeholders are of high quality while also minimizing the total fundraising required. How Firms Become Value-Driven Firms become value-driven by focusing on three activities (see Exhibit 1. 7). First, they share information about their customers and competitors across their own organization and with other firms that might be involved in acquire the product or service to the marketplace, such as manufacturers and superman companies.Second, they strive to balance their customers benefits and costs. Third, they concentrate on building relationships with customers. EXHIBIT 1. 7 Value-Oriented Firms Page 1 9 sacramental manduction Information In a value-based, market-oriented firm, marketers share information about customers and competitors that has been collected through customer relationship management, and integrate it across the firms various departments.The fashion designers for Zara, the Spain -based fashion retailer, for instance, collect purchase information and research customer trends to determine what their customers will want to wear in the next few weeks simultaneously, the logisticians those persons in charge of getting the merchandise to the stores use the same purchase annals to forecast sales and allocate appropriate merchandise to individual stores. Sharing and coordinating such information represents a critical success factor for any firm.Imagine what might happen if Zaras advertising department were to plan a special promotion but not share its sales projections with those people in charge of creating the merchandise or getting it to stores. Fashion designers for Zara, the Spain-based fashion retailer, collect purchase information and research customer trends to determine what their customers will want to wear in the next few weeks. They share this information with other departments to forecast sales and coordinate deliveries.Balancing Benefits with Costs Value-oriented marketers constantly measure the benefits that customers perceive against the cost of their offering. In this task, they use a vailable customer data to find opportunities in which they can better satisfy their customers needs and in turn develop long -term loyalties. Such a value-based orientation has helped Canadian Tire and Walmart outperform other department stores, and WestJet Airlines and Southwest Airlines outperform mainstream carriers.Also, as tell in the chapter vignette, RIM offers its customers not only the innovative, possess -packed portfolio of BlackBerry products, but also high-quality customer service at a competitive price. By establishing contracts with wireless carriers such as AT&T and BellSouth, it gained a solid footing before competitors such as Nokia entered the market. RIMs marketing savvy in making customer value the centrepiece of its strategy is one of the reasons why it has been able to beat the competition. To provide a great value, U. K. based easyJet offers no food service and generally flies to and from out-ofthe-way airports. Until recently, it sometimes cost more to fly within Europe than to fl y from the United States to Europe. 20 But low-frills, low-cost carriers such as Ryanair and easyJet, modelled on Southwest Airlines and JetBlue Airways, now offer customers what they want cheap intra -Europe airfares. Like their American counterparts, Ryanair and easyJet offer no food service and generally fly to and from out -of-the-way airports, such as Stansted, which is about 55 kilometres northeast of capital of the United Kingdom.But many customers find value despite such modest inconveniences. Consider, for example, the Lon don to Salzburg, Austria, route for $65 or the London to Sweden flight for $70. Values such as these are also what have given low -cost carriers in the United States approximately 25 percent of the market share. They are so popular that conventional airlines have started their own low-frills/low-cost airlines Singapore Airlines provides Tiger Airways and Australias Qantas offers Jetstar. Page 20 1. LO4Building Relationships with Customers During the past decade or so, marketers have begun to realize that they need to think about their customer orientation in terms of relationships rather than 21 transactions. A transactional orientation regards the buyerseller relationship as a series of individual transactions, so anything that happened before or after the transaction is of little importance. For example, used-car sales typically are based on a transactional approach the seller wants to get the highest price for the car, the buyer wants to get he lowest price, and incompl ete expects to do business w ith the other again. A relational orientation, in contrast, is based on the philosophy that buyers and sellers should develop a long-term relationship. According to this idea, the life sentence profitability of the relationship matters, not how much money is made during each transaction. For example, UPS works with its shippers to develop efficient transportation solutions. Over time, UPS becomes part of the fabric of the shippers organizations, and their trading operations become intertwined. In this scenario, UPS an d its shippers have developed a long-term relationship.Firms that practise value-based marketing also use a process known as customer relationship management (CRM), a business philosophy and set of strategies, programs, and systems that focus on 22 identifying and building loyalty among the firms most valued customers. Firms that employ CRM systematically collect information about their customers needs and then use that information to tar get their best customers with the products, services, and special pr omotions that appear most important to those customers. 1. LO5 Why Is Marketing Important? Marketing was once only an afterthought to production.Early marketing philosophy went something like this Weve made it now how do we get rid of it? Today, marketing has evolved into a major business function that crosses all areas of a firm or organization, as illustrated in Exhibit 1. 8. Marketing works with other departments, such as research and development (R&D), engineering, and production, to ensure that high-quality, innovative products that meet customers needs are available in the right quantity, at the right price, and at the right pla ce, that is, wherever they want to purchase it.It creates reciprocally valuable relationships between the company and its suppliers, distributors, and other outside(a) firms that are involved in the firms marketing process. It identifies those elements that lo cal customers value an d makes it possible for the firm to embellish globally. Marketing has had a significant impact on consumers as well. Without marketing, it would be difficult for any of us to learn about new products and services. You may even decide to keep an eye on a career in marketing after you graduate.Even if you pursue a career in another field, marketing knowledge will help you market yourself in ways that could land you your dream job. EXHIBIT 1. 8 Importance of Marketing These brands can be found in many countries. Marketing Expands Firms Global Presence A generation ago, Coca-Cola was available in many nations, but Levis and most other American and Canadian brands were not. But today most jeans, including those by Levi Strauss & Co. a nd Parasuco, are made in places other than Canada and the United States and are available tight everywhere.Thanks to MTV and other global entertainment venues,cheap foreign travel, and the Internet, you share many of your consumption behaviours with coll ege and university students in countries all over the globe. The best fashions, music, and even food trends disseminate rapidly around the world. Starbucks has correct its menu to meet customer wants in the Japanese market more effectively. Page 21 Take a look at your next shopping bag. Whether it contains groceries or apparel, you will find goods from many countries produce from Mexico, jeans from Italy, T -shirts from China.Global manufacturers and retailers stay on to make inroads into the Canadian market. Companies such as Honda, Sony, and Heineken sell as well in Canada as they do in their home countries. Swedens fashion retailer H 23 operates in 38 countries, including Canada. Its upscale competitor Spains Zara operates in more than 24 80 countries, including Canada. Starbucks even adjusted its menu to meet customer wants in the Japanese market more effectively. How does marketing contribute to a companys successful global expansion? Understanding customers is critical.With out the knowledge that can be gained by analyzing new customers needs and wants on a segment-by-segment, region-by-region basisone of marketings main tasksit would be difficult for a firm to expand globally. Power of the Internet 1. 1 shows how the Internet has grow the reach of marketers and changed marketing practices. Page 22 Marketing Is Pervasive Across the Organization In value-based marketing firms, the marketing department works seamlessly with other functional areas of the company to design, promote, price, and distribute products.Consider the Scion, a car and brand designed by Toyota for the less affluent youth market, which sometimes has been referred to as 26 Generation Y. Scions marketing department worked closely with engineers to ensure that the new car exceeded customers expectations in terms of design but remained affordable. The co mpany also coordinated the product offering with an innovative communications strategy. Because Generation Y is famous for its defens e to conventional advertising, Scion introduced a virtual road race in which participants received mileage points for sending Scion e-cards.The more places they visited, the more mileage points they received. At the end of the competition, each drivers points were totalled and compared with other racers scores. The driver with the most points won an onboard sailplaning system worth more than $2000. In addition, when Scion was a new car, the marketing department worked closely with the distribution department to ensure that advertising and promotions reached all distributors territories and that distribution existed where those promotions occurred.Thus, marketing was responsible for coordinating all these aspects of release and demand. Toyota introduced a virtual road race in which participants received mileage points for sending Scion e cards. At the end of the competition, the driver with the most points won an onboard gliding system worth more than $2000. Page 23 Power of the I nternet 1. 1 Internet Marketing Past, Present, and Future25 The Internet was released for commercial use in 1993. Immediately, the media, entrepreneurs, and others began to hoopla it as the new marketing channel that would change business practices.For entrepreneurs and investors, it was a time of euphoria, experimentation, and clamorousaneous wealth for established companies, it was a time of uncertainty and fear. Many traditional businesses with established brands thought that the Internet was just another fad while others did not quite understand how to integrate it with their existing businesses. Fear of making mistakes that could harm their brands led many companies to create online businesses that were separate from their core bricks -and-mortar or offline businesses.For instance, Procter & Gambles online business was called reflect. com and Kmarts company in the United States was called bluelight. com. The apprehension that established marketers had for jumping on the dot com bandwagon seemed justified when in 2000 the fickle growth of Internet businesses collap sed within a couple of months. The dot-com bust provided established marketers with breathing room to reflect on how they could incorporate the Internet into their business and marketing strategies.Around 2004, almost a decade later, marketers came to realize that an effective marketing strategy requires an integration of online and offline businesses to provide customers with a seamless multi-channel marketing experience. W hen marketers initially pursued Internet marketing, they were mostly excited abou t designing the best website by using the in style(p) publishing software and technology available. Although most websites were sooner text-based, marketers quickly adopted multimedia system technologies since their goal was to create an appealing website that would attract visitors and keep them on the site.Little thought was given as to whether or not customers needed or valued these features. The early focus on the technology and the product is reminiscent of the product-oriented market era of early twentieth century. Two decades later, in 2012, we observe that although websites are much more complex technologically, their focus has shifted to the consumer that is, how marketers can use the technology to identify and litigate customer needs and deliver the best customer value while generating profits. This focus seems more in line with the value based orientation described in the book.But, how did we get from a technology focus to a value -based focus? What were some of the stairs along the way? From Static Websites to Social Media to vigorous Marketing Rewind to 1993 when the commercial Internet came into being websites were static, text-based sites, which marketers used to push information to customers about their products and companies. Customer s wishing to make a purchase had to call a telephone number listed on the website. curtly thereafter, email mar keting became widespread, and the main focus was on how to create the perfect email and ensure it reached the target customers.Second-generation websites became more dynamic and interactive that is, they provided information to customers requests in real time, made greater use of multimedia technology, and offered modest interactivity. The next development was e-commerce capability, that is, the ability to order and pay for goods and services online. This capability laid the foundations for the explosive growth of online marketing since marketers could now reach customers general through their online stores and customers could order products and services anytime, anywhere.The era of instant gratification and ultimate shopping convenience seemed close-set(prenominal) than ever. E-commerce transactions grew exponentially year after year, and they continue to grow unabated. B2C, B2B, and C2C via auction sites b ecame possible and grew exponentially. The next phase in the evolution of Internet marketing was personalization and customization, where customers were given the ability to customize the look and feel of a website, and the products shown, to suit their preferences.Today, thanks to social networking sites such as Myspace, YouTube, Facebook, Flickr, and Twitter, and portable devices such as smartphones, social media and mobile marketing is all the rage. What will be next? The Internet is much more sophisticated and complex now than it was in the 1990s. It has changed and will continue to change. No one can predict the render